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Source: Reuters -
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A report is calling for KiwiRail to build the electric units and locomotives required for Auckland's urban rail development in its workshops.
A study by economic consultancy BERL says New Zealand would benefit nationally from additional jobs, economic output, tax take, and improved trade balance if the work is done locally.
The business case for the local production of the rolling stock was commissioned by the Rail and Maritime Transport Union (RMTU) and the Dunedin City Council.
BERL's analysis shows that the benefits compared to production overseas include the creation of between 770 and 1,270 additional full-time equivalent jobs over the construction period, $232 million to $250 million added to GDP, an increase in Crown revenue by a net $65 million to $70 million and a benefit to the trade balance of $114 million to $122 million.
And BERL says overseas manufacturers would need to produce the rolling stock at 62% less than the price of manufacture in New Zealand to offset the benefits to New Zealand GDP of producing the trains here.
It claims there are also likely to be further economic benefits including developing and maintaining skills in New Zealand; the opportunity to capture part of a $15 billion international rolling stock industry; opportunities for innovation and technology spillovers to other industries; ongoing maintenance contracts with associated jobs and contribution to GDP; and reduced exchange rate risk or risk-minimisation costs.
The RMTU, Dunedin City Council and New Zealand Council of Trade Unions want the government to ensure KiwiRail puts in a bid and for it as 100% shareholder to provide capital investment if needed.
"NZ rail workers are skilled, experienced, and want to do this work. Now we know the economic case backs us up," RMTU general secretary Wayne Butson said.
"From both a job creation point of view, and in wider benefits to the New Zealand economy, there is a strong case to build these trains at the Lower Hutt and Dunedin rail workshops."
The Auckland development requires 38 Electric Multiple Units (EMUs) and 13 electric locomotives to improve urban passenger transport in the region and KiwiRail is in the process of asking for bids for their supply.
KiwiRail's Hillside workshop in Dunedin and its Woburn workshop in the Hutt have experience in building and maintaining similar units.
"We acknowledge the support the government is already giving to KiwiRail," CTU secretary Peter Conway says, "but have pointed out the significant benefits to Crown revenue if KiwiRail proceeds with this project."
Strong support from Labour
The Labour Party is pushing for the government to take up the recommendations of the study. Transport spokesperson Darren Hughes says there is a strong business and economic case for the rolling stock to be Kiwi made.
"It shows it is possible, for the 38 multiple carriage units and 13 locomotives needed, to be built by New Zealand workers, to a standard and price, comparable to the highest international standards," he says.
Hughes says that simply on the basis of new job creation, the government should seriously consider keeping the $370 million project in New Zealand. "The numbers stack up and Kiwi workers can be trusted to do a quality job."
And Hughes says the longer term benefits also strengthen the case for the rail project to be fully Kiwi made.
"The costs of ongoing maintenance could be minimised with the workforce and skills being based in New Zealand, and it would also reduce the risk of costs spiralling out of control due to exchange rate volatility."
"This is a report that Transport Minister Steven Joyce cannot ignore. It sets out a clear business and economic case to create jobs for Kiwis and get the Auckland rail electrification project moving.
"A credible plan has been handed to the government to create jobs for Kiwis. If the government is serious about getting the economy and rail moving in New Zealand, it should take a good look at this report."
However the Transport Minister has already ruled out local companies being an automatic choice for the job. In March, Joyce said the the contract for the work would be subject a competitive tender process.
And KiwiRail chief executive Jim Quinn thinks while BERL's intent is good, the assumptions struggle to stand up. He says the rolling stock needed is very sophisticated and has never been designed or built here before.
Quinn says it also has very expensive pieces which would have to
be imported.
